In late August, Israeli tech organisation Shellanoo Group pronounced it was formulation an IPO on a Tel Aviv Stock Exchange.
But only 10 days later, a association withdrew a skeleton and laid off during slightest 20 of a employees.
The sudden about-face followed a really open debate opposite Shellanoo by successful voices in a Israeli tech village who aggressively challenged a company’s business.
Shellanoo, that means “ours” in Hebrew, is a two-year aged startup that develops mobile apps and internet services. One of a many good famous apps, called Blindspot, is also a many controversial. It was billed as a approach for teenagers to anonymously summary one another though fast held slam as a tact belligerent for cyberbullying.
Other apps and services listed on a Shellanoo website embody “My Life Socks,” a subscription use for, yes, shopping socks, and interactive synthetic comprehension apps for bargain a Bible and a Quran. But they have nonetheless to launch.
Shellanoo had lifted $25 million from a star-studded lineup of investors, including Nicki Minaj, will.i.am and Russian billionaire Roman Abramavich. It used celebrities (model Bar Refaeli’s hermit Dor Refaeli promoted Blindspot) and adorned billboards in Tel Aviv as a means of removing attention.
Shellanoo hoped to lift another $26 million from a IPO.
Then a questions began.
In Facebook posts on Sep 1 and Sep 3, Reem Sherman, who heads adult mobile growth during Pepper, a digital bank in Tel Aviv, plainly criticized Shellanoo.
Sherman took emanate with a IPO prospectus, arguing it didn’t clearly paint how many people were actively regulating a company’s products. Shellanoo’s conduct of communications David Strauss told CNNMoney that a association clearly settled it has 11 million active users opposite a apps and websites.
Soon after, on Sep 6, business publisher Shaul Amsterdamski of Israeli Public Broadcasting Corporation constructed a dual notation video addressing that and other red flags. He urged a open to be wakeful that their income could be appropriation Shellanoo if grant supports were to deposit in a IPO.
Other attention insiders told CNNMoney they listened that critics told intensity investors to drive transparent of a IPO.
“It didn’t make clarity that this association should go public,” one businessman in Israel told CNNMoney. “They didn’t have any denote that they are successful. We started seeking questions.”
Another doubt people were seeking was about a CEO’s pay. The IPO handbill indicated that O.D. Kobo’s income would boost on Sep 1 to some $80,000 per month (an boost that’s some-more than double his income as of Jan 2016, that was $32,000 per month.)
Ultimately, Kobo’s income was never raised, pronounced Strauss. He combined that Kobo creates a “minimal salary” of around $30,000 per month. He also remarkable that Kobo had invested $1.5 million of his possess income to launch Shellanoo.
After a IPO was suspended on Sep 7, one Israeli try capitalist, Michael Eisenberg of Aleph VC, posted a square on Medium in that he called Shellanoo a “vapor company.”
He wrote: “It was extravagantly transparent that their projected revenues subsequent from ‘businesses’ and ‘technologies’ that did not exist yet.”
Shellanoo pronounced that it was foul attacked.
“The Israeli press simply do not know record or a sector,” wrote Strauss in an email to CNNMoney final week.
He cited Uber as an instance of a association that’s valued rarely notwithstanding large losses. “It is hapless that stupidity of a Israeli press done such a bad pierce for a Tel Aviv Stock Exchange,” he added.
Strauss reliable that a association laid off 22 of a 71 employees, though pronounced it was partial of a plan to change some-more of a operations to Asia. “We feel that Israel is not welcoming to unfamiliar investment and are solemnly migrating operations to a offices in Asia,” wrote Strauss.
Strauss also pronounced that Shellanoo had hired a private questioner to demeanour into a backlash, and believes a critique was driven by competing interests, job it an try “ruin a IPO deliberately.”
Those CNNMoney spoke to refuted a claims.
“Israel is a really tiny country,” one tech workman in Israel told CNNMoney about how a word widespread about Shellanoo. “Comradery is a large partial of a Israeli tech world.”
He combined that a critique wasn’t about personal gain. “I didn’t get anything from it,” adding it was some-more about safeguarding a repute of a internal industry.
Eisenberg was happy a IPO was withdrawn, essay in his Medium post that it saved a Israeli tech village from “irreputable actors peeing in a common punch.”
“I consider some people fundamentally try to take advantage of an open market,” he after told CNNMoney. “The pleasing thing here is that a high tech village policed itself in a really effective way.”